Today's VAT increase from 17.5% to 20% will cost each household around £520 a year, according to price comparison website Kelkoo, with economists predicting reduced consumer spending and plummeting retail sales as a result. But what does the VAT rise mean in price terms?

We looked at a basket of goods that will be affected by the increase, to determine where prices have risen and by how much. Remember that not all purchases or transactions are subject to VAT – most food, baby wear, children's clothing and footwear, books, newspapers and magazines are free from the tax. Other items and services, such as domestic gas and electricity and other fuels, have VAT applied at a lower rate.

Some big retailers, including John Lewis, Marks & Spencer, Tesco, have said they will delay the introduction of today's VAT increases on most or all of their products for at least a few weeks as they wait to see what action their rivals take.

O2 and Three Mobile have levied the higher VAT charge (text messages have increased by more than the VAT rise from 10p to 12p), while Boots and Comet have lifted their prices too. Similarly, Next and Primark have raised prices while Amazon began applying the new 20% VAT rate to all orders dispatched from 12:00:01am this morning. Apple has also increased prices on its products from today.

Many broadband and phone providers have begun to pass on the rise. AOL's broadband-only contract has increased from £14.99 per month to £15.31 a month – a rise of £3.84 over one year. If you were to add Sky's One TV Pack and a BT line rental and calls package (unlimited weekend call plan) to the mix, you would fork out an extra £13.56 per year thanks to the VAT rise.

Michael Phillips, product director at broadbandchoices.co.uk, said: "The VAT rise may seem marginal but this is really going to add up, particularly for those who are heavy home phone users as VAT is charged on each phone call – many people forget this. Customers who don't bundle may also be hit harder, as they are already paying more to get their broadband, home phone and TV services from different providers."

The best way to mitigate the effect of the VAT hike is to change from three separate providers to a bundled deal with a single provider, which can save consumers over £300 per year. "This would easily wipe out the VAT hike's effect on the cost of broadband, home phone and digital TV," added Phillips. She highlights Virgin Media's bundle, costing £269.38 compared to £580.92 for the three separate tariffs above.

Members of major gym chains, including LA Fitness and Fitness First, were surprised to receive letters informing them of a rise in the cost of their membership above the VAT increase. Fitness First wrote: "As you may be aware the government is planning to increase VAT in January to 20 per cent, and this combined with rising costs means we have had to review our prices." The LA Fitness membership hotline referred members inquiring about "the recent price rise letter" to their local club.

Among the consumer champions are Sony, which is still offering its VAT cashback deal until 31 January 2011, and Superdrug, which is absorbing the VAT rise on 2,000 of its own brand items.

We want you to alert us to high street deals and bargains, where retailers are absorbing the VAT rise or offering other incentives to lure shoppers through the door.Have you bagged a bargain? Or have you had to fork out extra for something you could have bought cheaper just days earlier?